First Direct Launch 1.99% Mortgage

by Mark Johnston

The telephone and online bank, First Direct is still driving hard to take a even bigger share of the UK mortgage market by launching its cheapest tracker mortgage.

The banks which is owned by HSBC has launched a new mortgage to try and tempt customers from other lenders who are current sat on their banks standard variable rate. First Directs cheapest ever tracker mortgage is priced at just 1.49% above the Bank of England base rate of 0.5% making it just 1.99% for two years. Although it’s worth remembering that this can go up if interest rates increase within that period.

First Direct are charging a £999 fee for the mortgage but allow borrower to pay just £99 for an increased rate. If borrowers take this option the rate goes up to 1.69% above the 0.5% base rate. As with many mortgages, First Direct provides a free standard variation together with any legal charges and fees associated with re-mortgaging.

Unfortunately as with many mortgages in the current climate, homeowners need a pretty large deposit. Many lenders have been asking for upward of a 40% deposit with some even looking for 60%.

Last month First Direct launched a tracker mortgage that tracks the base rate at just less than 2 percent. Richard Tolchard, Senior product manager pointed out that savvy borrowers could save money by switching to a First Direct mortgage. He pointed out that the Council of Mortgages Lenders (CML) had recently released a report that showed that offset mortgages had risen and now accounted for 11 percent of all new mortgage approvals.

Mr Tolchard said: “We’ve always known how great the offset mortgage product is, so it’s pleasing to see that the public are starting to realise it too,”.

First Direct offer an offset mortgage that provides a 4.4% interest rate on savings whilst providing a great rate of interest on a home loan.

First Direct’s sister company, HSBC is currently offering a tracker mortgage as 1.69% over the Bank of England base rate of 0.5% giving a great overall rate of 2.19%. HSBC is only charging a very reasonable £99 application fee although the down side is that borrowers require massive sixty percent equity as the loan to value to a mighty 40%.

At the same time the level of service given to First Direct’s mortgage customers has also been highlighted by a spokesperson for the telephone bank. Richard Tolchard, senior product manager at the bank described the service enjoyed by the banks mortgage customers as “legendary”. He made the comments whilst pointing out some of the great offers that the firm has with fees start at just £99.

Mr Tolchard pointed out one of their current deals by saying: “With first direct’s 2.19 per cent two year tracker, homeowners can be enjoying lower monthly mortgage payments by the time their festive bills need paying,”

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